AT&T Paying High Price For iPhone 3G - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Mobile // Mobile Devices
04:11 PM

AT&T Paying High Price For iPhone 3G

Analysts differ on the exact figure, but AT&T could be paying as much as $425 in subsidies per iPhone.

Consumers will soon be able to snag the iPhone 3G at an attractive price -- but what will it cost AT&T?

As a general rule, wireless carriers pay about $200 to subsidize the price of a smartphone. But AT&T may be paying Apple $325 per unit for right of carriage, Oppenheimer financial analyst Yair Reimer wrote in a report.

Additionally, Reimer said AT&T will pay another $100 for subscribers signed up in Apple stores. When you add these figures to the retail price of the handset, AT&T could be paying as much as $624 for the 8-GB iPhone 3G, and $724 for the 16-GB version.

Representatives from Apple and AT&T didn't comment, but other analysts said Apple is receiving a tidy sum from the wireless carrier.

Piper Jaffray analyst Gene Munster estimated in a report Apple will receive an average of $466 per iPhone. Bernstein Research's Toni Sacconaghi said in a report that he expects iPhones to be sold to carriers for anywhere from $350 to $700 each.

For the first iPhone, AT&T and Apple had a monthly revenue-sharing deal, an uncommon practice in the wireless industry. For the iPhone 3G, the mobile operator recently said it would adopt the more traditional practice of reselling handsets to consumers at a subsidy.

AT&T said this move would affect the company's bottom line short term, and it expects to reduce earnings by 10 to 12 cents a share in each of the next two years. But, this strategy is expected to add to profits in 2010 by drawing more heavy-data subscribers.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

How CIO Roles Will Change: The Future of Work
Jessica Davis, Senior Editor, Enterprise Apps,  7/1/2021
A Strategy to Aid Underserved Communities and Fill Tech Jobs
Joao-Pierre S. Ruth, Senior Writer,  7/9/2021
10 Ways AI and ML Are Evolving
Lisa Morgan, Freelance Writer,  6/28/2021
White Papers
Register for InformationWeek Newsletters
Current Issue
Flash Poll